The Nigeria Deposit Insurance Corporation and the Nigeria Inter-Bank Settlement System Plc are set to formalise a stronger collaboration through the signing of a Memorandum of Understanding aimed at improving the speed and efficiency of reimbursing depositors whenever a bank fails in Nigeria. The proposed agreement is expected to further strengthen Nigeria’s financial safety-net framework and boost public confidence in the banking system.
According to a statement issued by the NDIC on Wednesday, the Managing Director and Chief Executive of the Corporation, Mr Thompson Sunday, disclosed this plan during a courtesy visit by the Executive Management team of NIBSS to the NDIC Head Office in Abuja. The NIBSS delegation was led by its Managing Director and Chief Executive, Mr Premier Oiwoh.
The planned MoU is coming at a critical time, as the NDIC recently commenced the liquidation process of two mortgage banks, Aso Savings and Loans Limited and Union Homes Savings and Loans Limited. The licences of the two financial institutions were revoked by the Central Bank of Nigeria, prompting the NDIC to step in as liquidator in line with its statutory mandate.
The NDIC has already assured depositors of the affected mortgage banks that their insured deposits of up to N2 million per depositor will be paid. The Corporation also stated that depositors with balances above the insured limit will be settled once the assets of the failed banks are realised and proceeds are distributed in line with existing laws and regulations.
Speaking during the visit, Mr Sunday commended NIBSS for its long-standing partnership with the NDIC and for its significant contributions to strengthening the Corporation’s role of depositor protection and maintaining confidence in the Nigerian banking system. He noted that the collaboration between both institutions has become increasingly important as the financial system embraces digital solutions and faster payment processes.
The NDIC Managing Director highlighted the crucial role played by NIBSS in supporting digital verification and payment processes, particularly through the Bank Verification Number platform. He explained that the BVN infrastructure made it possible for the NDIC to pay depositors of the failed Heritage Bank Limited directly into their alternative bank accounts in a seamless manner.
According to him, without the technical support and cooperation of NIBSS, it would have been difficult for the NDIC to achieve the level of efficiency recorded during the resolution of Heritage Bank, especially given the sudden nature of the bank’s closure. He stressed that the success recorded further underscored the need to formalise the relationship between both organisations through a clear and structured MoU.
Mr Sunday explained that the proposed MoU would focus on several critical areas designed to ensure faster and more transparent depositor reimbursement. One of the key areas is the real-time synchronisation of NDIC’s deposit registers and electronic records with NIBSS platforms. This, he said, would allow for swift verification of eligible depositors during bank resolution and reduce delays often associated with manual processes.
He also disclosed that the agreement would explore the expansion of disbursement channels for depositor claims. This could include the use of Mobile Money Operators and the possible introduction of an NDIC-branded mobile interface that would allow depositors to receive their funds more conveniently, especially those in underserved and remote areas.
Another major focus of the MoU, according to the NDIC boss, is investment in Single Customer View and interoperability infrastructure. This would enable instant validation of depositor information across the financial system in the event of bank failure, thereby improving accuracy, reducing fraud risks and speeding up payments.
Mr Sunday further praised NIBSS for its broader role in reforming Nigeria’s payment system and positioning it ahead of many peer countries globally. He noted that the efforts of NIBSS in promoting electronic payments and mitigating fraud across the financial system have been commendable and continue to support financial stability.
In his response, the Managing Director and Chief Executive of NIBSS, Mr Premier Oiwoh, expressed appreciation to the NDIC leadership for the sustained partnership that both organisations have enjoyed over the years. He said the collaboration has consistently focused on building a safer, more reliable and more efficient payment system for Nigerians.
Mr Oiwoh reaffirmed NIBSS’s full commitment to supporting the NDIC in delivering its mandate of depositor protection. He explained that NIBSS was established to serve Nigerians by providing the technological backbone required for a stable and efficient financial system, and that this responsibility remains central to its operations.
He emphasised the importance of prompt and efficient reimbursement of depositors whenever banks fail, noting that such actions play a key role in maintaining public trust in the banking system and promoting financial inclusion. According to him, the work of the NDIC in ensuring that depositors do not lose confidence in the financial system aligns closely with the objectives of NIBSS.
Mr Oiwoh also disclosed that NIBSS is working closely with law enforcement agencies to further strengthen the security of Nigeria’s payment infrastructure. He added that ongoing investments are being made to enhance system resilience and reduce the cost of transactions on NIBSS platforms for financial institutions and end users.
The planned MoU between the NDIC and NIBSS is expected to usher in a new phase of digitised, responsive and technology-driven depositor reimbursement processes. Industry observers believe that the agreement will further reinforce confidence in Nigeria’s banking system by ensuring that depositors can access their funds quickly and securely in the event of bank failure.
